As foreclosure rates hit record levels, Short Sales have become the most common exit strategy sellers turn to avoid foreclosure.
How does a Short Sale work? In essence, the mortgage lender agrees to accept a price less than what the seller owes on the mortgage and agrees to forgive the rest of the loan. If a property has more than one loan with different lenders, all lenders must agree to accept the Short Sale. This agreement prevents a seller going into foreclosure and the lender(s) taking the burden of the property. Once the lender(s) agree(s) to a Short Sale, your Real Estate Agent can help sell your home and find a buyer.
Note to Sellers: Sellers considering a Short Sale must understand few important items.
- First things first, ensure that the loan is not sold to a third party lender. It is important to find out at first and get approval from the appropriate parties owning the loan. So, how can you find out? Ask the title company to check public records for an assignment of the deed of trust or other documents that reflect the loan has been sold.
- In order for a lender to agree on a Short Sale, you must provide a lot of documentation such as a hardship letter, profit or loss statement, monthly budget, tax returns etc.. Ask the lender for a list of required documents, make copies and send a complete package.
- Get a commitment letter from the lender that states they agree to a Short Sale.
- Once your Real Estate Agent finds an offer to submit to the lender, show comparable sales to justify the offer.
Notes to Buyers: It is always wise to consult a Real Estate Professional to answer your questions and help with the process of buying a Short Sale property.
- Not all Short Sale listings are Short Sales. A Real Estate agent and a seller can list a property as a Short Sale hoping the lender will take the offer. Therefore, unless the lender has agreed to a Short Sale upfront, the seller, Seller Agent or the Buyer Agent does not know if the lender will accept the offer.
- As with any other home buying process, it is important to have a pre-approval letter. When making an offer, it is wise to send a pre-approval letter along with a copy of the sizeable earnest money deposit to reflect your ability to obtain a mortgage and intent to close the transaction.
MOST IMPORTANT THING TO REMEMBER
GET THE SELLER'S LENDER INVOLVED FROM DAY ONE!!!!!